Engineering Economy 7th Edition by Leland Blank ,Anthony Tarquin

Exercise 58

When the country's economy is expanding, AB Investment Company is optimistic and expects a MARR of 15% for new investments. However, in a receding economy the expected return is 8%. Normally a 10% return is required. An expanding economy causes the estimates of asset life to go down about 20%, and a receding economy makes the n values increase about 10%. Calculate and observe or plot the sensitivity of PW values versus
a) the MARR and b) the life values for the two plans detailed below, using the most likely estimates for the other factors. c) Considering all the analyses, under which scenario, if any, should plan M or Q be rejected